IGH

What kpmg do in IGH ?

Our Infrastructure Government and Healthcare (IGH) practice provides an integrated suite of
service offerings ranging from strategy and policy advisory to facilitating project execution,
project funding and asset operations, project management governance, public services
transformation, and technology transformation services, amongst others to help meet the
specific requirements of our private sector and government clients.

MSME
MSMEs provide employment to over 110 million people and contribute 30 to 35 per cent to the
GDP.

Measures to address the liquidity crunch

 There is a severe disruption in demand and payment cycles leading to

challenges in terms of the capacity to repay loans in a timely manner by MSMEs. The
payment of installments of loans, both personal and business, should be deferred by
a few months without the levy of any penalty
 Several states have announced lockdown and this is likely to get extended to
others leading to complete shutdown of production. The salaries/wages of workers
during the period of shutdown and slowdown will become a huge liability for MSMEs.
During shutdown, salaries/wages could be paid through Employees' State Insurance
Corporation (ESIC) or there should be an assistance from the government towards
the payouts
 The Trade Receivable Discounting System (TReDS) should be made effective
and all pending payments should be immediately cleared.

Relaxation with respect to fiscal and regulatory compliances

 The date to deposit advance tax should be extended by six months

 Businesses are subject to a lot of inspections and physical audits by local bodies
and regulatory institutions. Such inspections and any prosecution arising out of these
should be withheld till the epidemic is under control
 All GST and other tax refunds should be credited to the businesses immediately
to tide over the lack of fund availability with the enterprises
 Delivery of all imports is being allowed after a cooling period of 14 days for the
cargo. In view of this restriction, the government could consider waiving off the
demurrage and shipping charges imposed on the importers. 

Credit support

 Increasing the open cash credit (OCC) account limits for MSMEs by 20 per cent
would have a positive impact on the liquidity available with these businesses. This
limit could be reviewed on a monthly basis and revised as per the prevailing situation
 Banks may be directed to provide funds to ease out the monthly expenses
related to utilities, paying of wages, etc.
 Banks may be asked to substantially ease the margin requirements and make
stocks and receivables totally fungible for security purposes
 State Bank of India has introduced an emergency line of credit for businesses
impacted by COVID-19 and this is specifically aimed at aiding MSMEs. Other banks
should be encouraged to take similar measures with lower/flat interest rates, higher
moratorium period, ease of sanction and flexible repayment schedules
 The financial cycle of exports is longer and, hence, the credit period on export
sales should be extended.